Texaco has said it plans to be finished with code repair by . . . "All together, let's hear it!" -- December 31, 1998. Why? Let's hear it again: "This will allow a full year before the millennium change to validate the system modifications. . . ."
This is worrisone: "Embedded systems are primarily found in equipment in our operating units like producing fields, refineries and pipelines." What is true of Texaco's systems is true of the oil industry's.
Then there is this nagging problem: "In mid-1998 we will begin addressing contingency plans with these customers and suppliers in order to minimize the negative impacts on Texaco if they are not year 2000 ready." A contingency plan if a supplier is not compliant is to find a compliant supplier. What if there are none, which is the most likely scenario?
Texaco says that the cost of the y2k repair will not affect corporate profitability. This means either: (1) Texaco is incredibly profitable, or (2) Texaco isn't planning to spend much on its y2k project. I have my opinion. You have yours.
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How big is the problem for our company?
Texaco recognizes that everything that uses a date, from the mainframe computer to a control system located at a wellhead, may be affected. This includes PCs, minicomputers, point-of-sale scanners, and other systems used by Texaco. Orders, price changes, buying, accounting, and many other functions all depend on date sequencing to determine the number of days between two dates. Our customers and suppliers could equally be affected, which in turn could have an impact on our business.
In our search for potential problem areas we are reviewing hardware and software associated with our mainframe computers, PCs and client/servers, telecommunications and embedded systems. Embedded systems are primarily found in equipment in our operating units like producing fields, refineries and pipelines.
What are we doing now?
Texaco's initial concern was with the mainframe computer systems that support our business. Inventories of our mainframe systems are now complete, and we are in the process of repairing or replacing those that are shown to not be year 2000 compliant. Fortunately a number of our major systems have recently been rewritten and are already year 2000 compliant. Many others had been planned for replacement for reasons other than year 2000.
Our current focus has expanded to address our desktop PCs, servers, telecommunications systems and embedded systems. A large percent of the PCs, servers and telecommunications systems are maintained either under contract with an outside vendor or by our own Global Information Services Department. The remaining systems of these types are frequently located in areas removed from our major operating centers, often in developing countries. These 'remote' systems require an above average effort to identify, assess and remediate, but they are also less likely to cause major disruptions to overall Texaco operations. . . .
HOW WILL THIS AFFECT OUR BUSINESS?
Our plan is to have all Texaco mission critical systems compliant by the end of 1998. This will allow a full year before the millennium change to validate the system modifications and to make adjustments for customers and suppliers who have not been as aggressive as we have in addressing their own year 2000 issues. In mid-1998 we will begin addressing contingency plans with these customers and suppliers in order to minimize the negative impacts on Texaco if they are not year 2000 ready.
Costs to modify systems to achieve Year 2000 compliance have been, and are estimated to remain, immaterial to Texaco's results of operations or financial condition.